Limitation of liability

Journal of Maritime Law and Commerce

Volumn 31, Issue 2, 2000, Pages 263-279

  Allen, Craig H ^a  

^a UNIVERSITY OF WASHINGTON   (United States)

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EID: 0042407954     PISSN: 00222410     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (91)

1. 9 Stat. 635 (1851), codified at 46 U.S.C. app. §§ 181-189. The Act had no formal title.
2. The MLA Report, MLA Doc. No. 729 (May 2, 1997), at 10487, 10527-36.
3. Convention for the Unification of Certain Rules Relating to International Transportation by Air, concluded Oct. 12, 1929, 49 Stat. 3000, T.S. No. 876, 137 L.N.T.S. 11 (1934) (limiting air carrier's liability for injury or death claims to $75,000/passenger).
4. 42 U.S.C. § 2210(e) (generally limiting operator's public liability to $500 million or less).
5. 46 U.S.C. app. § 1304(5) (limiting carrier liability to $500/package or customary freight unit).
6. 33 U.S.C. § 2704(a) (limiting vessel liability to $1200/ton for tankers and $600/ton for other vessels).
7. 42 U.S.C. § 9607(c) (limiting vessel liability to $300/ton).
8. International Convention for the Unification of Certain Rules Relating to the Limitation of Liability of Owners of Seagoing Ships, entered into force Dec. 1, 1986, reprinted in 6 Benedict on Admiralty Doc. No. 5-4 (7th rev. ed. 1997).
9. Boal, Efforts to Achieve International Uniformity of Laws Relating to the Limitation of Shipowners' Liability, 53 Tul. L. Rev. 1277, 1296 (1979).
10. Entered into force June 19, 1975, 973 U.N.T.S. No. 3, reprinted in 6A Benedict on Admiralty Doc. No. 6-3 (7th rev. ed. 1997).
11. See 46 U.S.C. app. § 183(a) and Rule F, Supplemental Rules for Certain Admiralty and Maritime Claims. Limitation for public vessels is provided by 46 U.S.C. app. § 789.
12. 46 U.S.C. app. § 183(b).
13. See Hercules Carriers, Inc. v. Claimant State of Florida (The Summit Venture), 768 F.2d 1558, 1563-64 (11th Cir. 1985); Farrell Lines Inc. v. Jones (The African Neptune), 530 F.2d 7, 10, 1976 AMC 1639 (5th Cir. 1976).
14. See Hercules Carriers, Inc. v. Claimant State of Florida (The Summit Venture), 768 F.2d 1558, 1563-64 (11th Cir. 1985); Farrell Lines Inc. v. Jones (The African Neptune), 530 F.2d 7, 10, 1976 AMC 1639 (5th Cir. 1976).
15. A shipowner may also limit liability for some claims that sound in contract, but because such claims are not generally relevant to the liability implications of the new ISM Code this brief essay will focus on claims based on fault.
16. Farrell, 530 F.2d at 13.
17. In re Kinsman Transit Co. (The MacGilvray Shiras), 338 F.2d 708, 715, 1964 AMC 2503 (2d Cir. 1964), cert. denied, 380 U.S. 944 (1965).
18. In re Kinsman Transit Co. (The MacGilvray Shiras), 338 F.2d 708, 715, 1964 AMC 2503 (2d Cir. 1964), cert. denied, 380 U.S. 944 (1965).
19. N. Healy & J. Sweeney, The Law of Marine Collision 390-91 (1998) (citations omitted).
20. Farrell, 530 F.2d at 10 (*although the petitioner in limitation bears the burden of proving lack of privity or knowledge, the initial burden of proving negligence or unseaworthiness rests with the libellants.*) (citation omitted).
21. Restatement (Second) of Agency § 213 (1958).
22. See, e.g., Hercules Carriers, Inc. v. Claimant State of Florida (The Summit Venture), 768 F.2d 1558 (11th Cir. 1985).
23. 285 U.S. 502, 1932 AMC 503 (1932).
24. 317 U.S. 406, 1943 AMC 18 (1943) (holding that shipowner who selects competent persons to inspect a vessel and is not on notice as to existence of a defect cannot be denied limitation).
25. See In re Complaint of Sheen, 709 F. Supp. 1123, 1989 AMC 1345 (S.D. Fla. 1989) (holding that shipowner is entitled to limitation in cases where inspection and management is delegated to another only if the owner (1) inspects or arranges for a reasonable inspection service; (2) chooses employees with reasonable care; and, (3) gives suitable general instructions).
26. Restatement (Second) of Torts § 409 (1965). The person engaging the contractor may, however, be liable where the contractor or its employee has injured another if the person was, for example, negligent in selecting the contractor. See id. § 411.
27. Restatement of Agency, supra note 19, § 214.
28. Id. §§ 219 & 243-249.
29. 46 U.S.C. app. § 183(a). 28 See 42 U.S.C. § 9607(c)(2).
30. Lord v. Goodall, Nelson & Perkins S.S. Co., 15 F. Cas. 884, 887-88 (C.C.D. Cal. 1877), aff d, 102 U.S. (12 Otto) 541 (1880).
31. Lord v. Goodall, Nelson & Perkins S.S. Co., 15 F. Cas. 884, 887-88 (C.C.D. Cal. 1877), aff d, 102 U.S. (12 Otto) 541 (1880).
32. In re Guggenheim (The Trillora II), 76 F. Supp. 50, 1948 AMC 132 (E.D.S.C. 1947).
33. Sec Coryell v. Phipps (The Seminole), 317 U.S. 406, 412, 1943 AMC 18 (1943).
34. The statutory class of "seagoing vessels" excludes, inter alia, pleasure yachts, tugs, towing vessels, and fishing vessels and their tenders. 46 U.S.C. app. § 183(f).
35. Id. § 183(e).
36. See Moore-McCormack Lines, Inc. v. Armco Steel Corp. (The Mormackite), 272 F.2d 873, 1960 AMC 185 (2d Cir. 1959) (denying limitation as to seamen death claims, for which master's knowledge of unseaworthiness was imputed to owner, and granting it as to cargo claimants, for which master's knowledge was not imputed), cert. denied, 362 U.S. 990 (1960).
37. See Moore-McCormack Lines, Inc. v. Armco Steel Corp. (The Mormackite), 272 F.2d 873, 1960 AMC 185 (2d Cir. 1959) (denying limitation as to seamen death claims, for which master's knowledge of unseaworthiness was imputed to owner, and granting it as to cargo claimants, for which master's knowledge was not imputed), cert. denied, 362 U.S. 990 (1960).
38. 317 U.S. at 410-11 (dictum).
39. Id. at 411.
40. Cupit v. McClanahan Contractors, Inc., 1 F.3d 346, 348, 1994 AMC 784 (5th Cir. 1993), cert. denied, 510 U.S. 1113 (1994).
41. Cupit v. McClanahan Contractors, Inc., 1 F.3d 346, 348, 1994 AMC 784 (5th Cir. 1993), cert. denied, 510 U.S. 1113 (1994).
42. 317 U.S. at 410 (citing The Linseed King, infra).
43. 285 U.S. 502, 1932 AMC 503 (1932) (concluding that "Stover's position as works manager . . . and the scope of his authority render his privity or knowledge that of the company.").
44. The 84-H, 296 F. 427, 1924 AMC 774 (2d Cir. 1923) ("[t]he privity or knowledge must be actual and not merely constructive."), cert. denied, 264 U.S. 596 (1924).
45. The 84-H, 296 F. 427, 1924 AMC 774 (2d Cir. 1923) ("[t]he privity or knowledge must be actual and not merely constructive."), cert. denied, 264 U.S. 596 (1924).
46. 285 U.S. 502, 1932 AMC 503 (1932).
47. G. Gilmore & C. Black, The Law of Admiralty § 10-24, at 886 (2d ed. 1975); see also Restatement of Torts, supra note 24, § 12 ("should know" denotes the fact "that a person of reasonable prudence and intelligence or of the superior intelligence of the actor would ascertain the fact in question in the performance of his duty to another, or would govern his conduct upon the assumption that such fact exists.").
48. See, e.g., Empresa Lineas Maritimas Argentinas S.A. v. United States, 730 F.2d 153, 155, 1984 AMC 1698 (4th Cir. 1984) (holding that the shipowner's knowledge need not be actual. "The shipowner is chargeable with knowledge or acts or events or conditions of unseaworthiness that could have been discovered through reasonable diligence.").
49. Gilmore & Black, supra note 42, § 10-24, at 886-87.
50. See Federazione Italiana dei Corsorzi Agrari v. Mandansk Compania de Vapores, S.A. (The Perama), 388 F.2d 434, 1968 AMC 315 (2d Cir.) (recognizing in dictum a non-delegable duty to provide a seaworthy vessel "in the primitive sense"), cert. denied, 393 U.S. 828 (1968). But see Waterman S.S. Corp. v. Gay Cottons (The Chickasaw), 414 F.2d 724, 729, 1969 AMC 1682 (9th Cir. 1969) (rejecting the non-delegable duty basis for denying limitation in a case involving liability to cargo after finding that "[n]otwithstanding the conclusion of Gilmore & Black, we have found no case which has denied limitation of liability because of the negligence of a non-managerial employee. On the contrary, all cases denying limitation of liability to a corporate shipowner have emphasized that the negligence or lack of due diligence to make seaworthy was attributable to managerial personnel.").
51. See Federazione Italiana dei Corsorzi Agrari v. Mandansk Compania de Vapores, S.A. (The Perama), 388 F.2d 434, 1968 AMC 315 (2d Cir.) (recognizing in dictum a non-delegable duty to provide a seaworthy vessel "in the primitive sense"), cert. denied, 393 U.S. 828 (1968). But see Waterman S.S. Corp. v. Gay Cottons (The Chickasaw), 414 F.2d 724, 729, 1969 AMC 1682 (9th Cir. 1969) (rejecting the non-delegable duty basis for denying limitation in a case involving liability to cargo after finding that "[n]otwithstanding the conclusion of Gilmore & Black, we have found no case which has denied limitation of liability because of the negligence of a non-managerial employee. On the contrary, all cases denying limitation of liability to a corporate shipowner have emphasized that the negligence or lack of due diligence to make seaworthy was attributable to managerial personnel.").
52. See Federazione Italiana dei Corsorzi Agrari v. Mandansk Compania de Vapores, S.A. (The Perama), 388 F.2d 434, 1968 AMC 315 (2d Cir.) (recognizing in dictum a non-delegable duty to provide a seaworthy vessel "in the primitive sense"), cert. denied, 393 U.S. 828 (1968). But see Waterman S.S. Corp. v. Gay Cottons (The Chickasaw), 414 F.2d 724, 729, 1969 AMC 1682 (9th Cir. 1969) (rejecting the non-delegable duty basis for denying limitation in a case involving liability to cargo after finding that "[n]otwithstanding the conclusion of Gilmore & Black, we have found no case which has denied limitation of liability because of the negligence of a non-managerial employee. On the contrary, all cases denying limitation of liability to a corporate shipowner have emphasized that the negligence or lack of due diligence to make seaworthy was attributable to managerial personnel.").
53. Gilmore & Black, supra note 42, § 10-24, at 887 n.101.
54. Gibboney v. Wright, 517 F.2d 1054, 1059, 1975 AMC 2071 (5th Cir. 1975) (holding that a racing sloop owner owed his passengers a duty of reasonable care, but not a warranty of seaworthiness).
55. Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625, 1959 AMC 597 (1959) (holding that a shipowner owes visitors a duty of reasonable care).
56. See 33 U.S.C. § 905(b).
57. Usner v. Luckenbach Overseas Corp., 400 U.S. 494, 1971 AMC 277 (1977) (explaining that "[u]nseaworthiness is a condition, and how that condition came into being-whether by negligence or otherwise - is quite irrelevant to the owner's liability for personal injuries resulting from it.").
58. Hercules Carriers, Inc. v. Claimant State of Florida, 768 F.2d 1558, 1564 & n.3 (11th Cir. 1985) ("merging" its analysis of negligence and unseaworthiness "because the test of reasonableness is the primary inquiry under both categories.").
59. See Restatement of Agency, supra note 19, § 278.
60. 398 F.2d 204, 210, 1968 AMC 2664 (5th Cir.), cert. denied, 393 U.S. 983 (1968). The same court, in Farrell Lines Inc. v. Jones (The African Neptune), 530 F.2d 7, 10-12, 1976 AMC 1639 (5thCir. 1976), embarked on an analysis of whether the vessel involved was unseaworthy when it allided with a bridge without first identifying any parties to whom a duty of seaworthiness was owed.
61. 398 F.2d 204, 210, 1968 AMC 2664 (5th Cir.), cert. denied, 393 U.S. 983 (1968). The same court, in Farrell Lines Inc. v. Jones (The African Neptune), 530 F.2d 7, 10-12, 1976 AMC 1639 (5thCir. 1976), embarked on an analysis of whether the vessel involved was unseaworthy when it allided with a bridge without first identifying any parties to whom a duty of seaworthiness was owed.
62. 398 F.2d 204, 210, 1968 AMC 2664 (5th Cir.), cert. denied, 393 U.S. 983 (1968). The same court, in Farrell Lines Inc. v. Jones (The African Neptune), 530 F.2d 7, 10-12, 1976 AMC 1639 (5thCir. 1976), embarked on an analysis of whether the vessel involved was unseaworthy when it allided with a bridge without first identifying any parties to whom a duty of seaworthiness was owed.
63. 768 F.2d at 1565-66 (holding that because the owner has "a non-delegable duty to provide a competent master and crew, unseaworthiness can be caused by insufficient manning of the vessel or an incompetent crew."). The court did not identify to whom such a duty was owed.
64. In re Kinsman Transit Co. (The MacGilvray Shiras), 338 F.2d 708, 716, 1964 AMC 2503 (2d Cir. 1964) (holding that Continental's claim that Kinsman may not limit liability because of its breach of the warranty of seaworthiness in the storage contract is defeated both by the lack of proof breach "and by the fact that the exception would apply only to damage to the stored cargo, which did not occur."), cert. denied, 380 U.S. 944 (1965). The court also distinguished between the scope of the duty to provide a seaworthy vessel to crewmembers and the distinct duty to cargo.
65. In re Kinsman Transit Co. (The MacGilvray Shiras), 338 F.2d 708, 716, 1964 AMC 2503 (2d Cir. 1964) (holding that Continental's claim that Kinsman may not limit liability because of its breach of the warranty of seaworthiness in the storage contract is defeated both by the lack of proof breach "and by the fact that the exception would apply only to damage to the stored cargo, which did not occur."), cert. denied, 380 U.S. 944 (1965). The court also distinguished between the scope of the duty to provide a seaworthy vessel to crewmembers and the distinct duty to cargo.
66. Id. at n.3.
67. 46 U.S.C. app. § 1304(1).
68. See, e.g., Boudoin v. Lykes Bros. S.S. Co., 348 U.S. 336, 1955 AMC 488 (1955) (holding owner liable for "breach of the warranty of seaworthiness" to seaman injured by fellow crewmember).
69. Richardson v. Harmon, 222 U.S. 96, 106 (1911) (holding that shipowner may not limit liability for "his own fault, neglect, and contracts."). But see Earl & Stoddart, Inc. v. Ellerman's Wilson Line, Ltd. (The Galileo), 287 U.S. 420, 429, 1933 AMC 1 (1932) (bills of lading are "ship's documents," and do not fall within the personal contracts exception).
70. Richardson v. Harmon, 222 U.S. 96, 106 (1911) (holding that shipowner may not limit liability for "his own fault, neglect, and contracts."). But see Earl & Stoddart, Inc. v. Ellerman's Wilson Line, Ltd. (The Galileo), 287 U.S. 420, 429, 1933 AMC 1 (1932) (bills of lading are "ship's documents," and do not fall within the personal contracts exception).
71. See Coryell v. Phipps (The Seminole), 317 U.S. 406, 410, 1943 AMC 18 (1943) ("[w]e are not concerned here, however, with the question of limitation of liability where the loss was occasioned by the unseaworthiness of the vessel. The limitation acts have long been held not to apply where the liability of the owner rests on his personal contract.") (citations omitted).
72. See W. Tetley, International Conflict of Laws: Common, Civil and Maritime 518-31 (1994); Comment, A New Role for Interest Analysis in Admiralty Limitation of Liability Conflicts, 21 Tex. Int'l L.I. 495 (1986).
73. See W. Tetley, International Conflict of Laws: Common, Civil and Maritime 518-31 (1994); Comment, A New Role for Interest Analysis in Admiralty Limitation of Liability Conflicts, 21 Tex. Int'l L.I. 495 (1986).
74. Oceanic Steam Nav. Co. v. Mellor (The Titanic), 233 U.S. 718, 1998 AMC 2699 (1914).
75. Black Diamond S.S. Corp. v. Robert Stewart & Sons, Ltd., 336 U.S. 386, 1949 AMC 393 (1949).
76. See Lauritzen v. Larsen, 345 U.S. 571, 1953 AMC 1210 (1953); Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 1970 AMC 994 (1970).
77. See Lauritzen v. Larsen, 345 U.S. 571, 1953 AMC 1210 (1953); Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 1970 AMC 994 (1970).
78. American Dredging Co. v. Miller, 510 U.S. 443, 1994 AMC 913 (1994).
79. 46 U.S.C. app. § 183(a).
80. Tetley, supra note 60, at 509-10 & 524-31.
81. Oceanic Steam Nav. Co. v. Mellor (The Titanic), 233 U.S. 718, 732, 1998 AMC 2699 (1914) (holding that claimants who elect to sue the defendant in the U.S. are limited by the U.S. Limitation Act). The Court was not required to address situations in which the owner was not eligible for limitation under the U.S. Limitation Act.
82. Done at London, Nov. 1, 1974, 32 U.S.T. 47, T.I.A.S. No. 9700, reprinted in 6D Benedict on Admiralty, Doc. No. 14-1 (7th rev. ed. 1997).
83. International Management Code for the Safe Operation of Ships and for Pollution Prevention (International Safety Management Code), Annex to IMO Res. A.741(18), done at London, Nov. 4, 1993, reprinted in 6D Benedict, supra note 68, Doc. No. 14-2.
84. Hellenic Lines, Ltd. v. Prudential Lines, Inc. (The Hellenic), 813 F.2d 634, 1987 AMC 2470 (4th Cir. 1987).
85. In re New England Fish. Co., 465 F. Supp. 1003, 1979 AMC 1910 (W.D. Wash. 1979).
86. Cf. Restatement of Agency, supra note 19, § 275 (where an agent has a duty to disclose knowledge to the principal, knowledge by the agent is imputed to the principal).
87. Id. § 278. Illustration 2 to comment a describes an example in which an insured has not yet learned of a vessel's sinking at the time he insures it, even though his agent has learned of it.
88. Id. § 275, comment b. See also id. § 277 (information which an agent "should" know is not imputed to the owner unless the principal has a duty to exercise care in obtaining the information).
89. LLMC Convention, supra note 8, art. 4.
90. The 84-H, 296 F. 427, 1924 AMC 774 (2d Cir.) (holding that "[t]he privity or knowledge must be actual and not merely constructive"), cert. denied, 264 U.S. 596 (1924).
91. The 84-H, 296 F. 427, 1924 AMC 774 (2d Cir.) (holding that "[t]he privity or knowledge must be actual and not merely constructive"), cert. denied, 264 U.S. 596 (1924).